A Bump in the Road to Recovery

Sometime next year we are going to notice that a funny thing happened on the way to the economic recovery; we got hit with a massive tax. The tax will be at least $400 billion dollars annually, about half of the one time stimulus package. However, instead of building electric grids and roads and paying policemen and teachers this revenue will fund such destructive enterprises as global terrorism, the Iranian nuclear program, and Russia’s rearmament. OPEC will impose the tax when our oil appetite returns and oil prices go back above $100/barrel.

However, there is a solution; it requires some foresight and political will on the part of the public. It requires that we understand that our American love affair with cheap oil is actually more like an abusive relationship. We need to get out.

The solution is as follows. Tax gasoline starting at $1/gallon and raising that $1/year until the tax is $3/gallon (revenues $450 billion). Rebate the tax at a flat rate to all consumers so that every man, woman, and child in America gets a check for approximately $1500/year. The rebate goes up or more probably down because the rebate solely comes from the revenues from the tax. However, under any circumstance, we have an energy policy at no net cost to the taxpayer.

The day such legislation is passed oil prices drop because we the people, not politicians or pundits, would be saying we are finally going to get serious about our abusive relationship with oil. The price would continue to drop because of the effect such a tax would have on demand. After say a $20 drop in the price of a barrel of oil the government says it will collect the next ten-dollar-a-barrel drop as a tax. (Essentially, OPEC would be paying the bill.) With that $50 to $70 billion/year we build a 21st century power grid, help American car manufacturers retool to build cars that get 75+ mpg, fund renewable energy research, and expand public transportation.
With such a plan, we could be free of imported oil by 2025 and free of oil in any form by 2040. With these billions re-channelled, we can finally get out of bed with the people who are trying to kill us, and cozy up with a healthy, homegrown relationship to energy—one that gives back at least as much as it takes.